Managing SG&A costs for sustainable growth in a volatile environment
Optimizing Selling, General, and Administrative (SG&A) costs is essential for businesses to enhance efficiency and boost profitability. By strategically managing these expenses, companies can cut waste, streamline operations, and improve profit margins. This approach ensures better resource allocation, strengthens competitiveness, and supports sustainable growth. Explore H&Z's cost optimization strategies to achieve your goals effectively.
Selling, general, and administrative (SG&A) costs encompass a wide range of expenses essential for administration, including salaries, rent, marketing, and other costs. In a volatile macroeconomic environment marked by rising energy costs, supply chain disruptions, and increasing labor costs, companies face significant pressure to maximize efficiency. Additionally, geopolitical uncertainties and rapid technological changes heighten the necessity for careful SG&A cost management to maintain competitiveness and foster sustainable growth.
Identifying SG&A savings by function
Efficient processes and structures are critical in addressing these challenges. By analyzing cost distribution, companies can pinpoint areas for potential savings. The following illustration highlights the potential savings achievable by function.
Building on this analysis, we collaboratively define the company's purpose and integrate it within the organization. We jointly develop the appropriate strategy, ensuring that the purpose is not merely a statement but is genuinely perceived as meaningful and actively embodied.
Systematic cost improvement with the H&Z approach: A five-element framework
The H&Z approach is a structured method recommended for systematically tackling improvements, based on five key elements:
- Align on baseline: Establish a common baseline to consistently evaluate cost structures.
- Utilize H&Z benchmark database: Leverage a comprehensive benchmark database for performance comparisons.
- Expert panel survey: Conduct expert surveys to incorporate industry-specific insights and best practices.
- Calibrate with H&Z functional experts: Coordinate with H&Z functional experts to accurately interpret and adjust the data.
- Derive improvement potentials using statistical methods: Use statistical methods to identify concrete approaches for cost savings and efficiency increases.
This structured approach not only helps companies respond to current challenges but also proactively enhances their resilience and effectiveness for the future.
Our Experts
Florian Oesterle
Katharina Bader
